Effective Dispute Resolution by Independent National Communications Regulatory Authorities

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Effective Dispute Resolution by Independent
National Communications Regulatory Authorities
Joe McNamee Serbian Agency for Telecommunications,
Belgrade 25 May 2007
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Political Intelligence

• Research and public affairs consultancy
• Conducts research on impact of legislation for
  major international telcos and Internet companies
• Runs two European and four national ICT-related
  trade associations
• Three studies for the European Commission
  numbering, local loop unbundling, ICT in Russia
  and former Soviet states
• Contracted to European Parliament for ICT
  research
• Previously worked on Southern Caucasus with GIPI
  for Eurasia foundation on E-Commerce regulation

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Overview

• Introduction
• EU Approach
• Disputes between Communications Service
  Providers
• Some best and worst practice/experience
• Consumer disputes
• Good and less good experiences from the UK
• Conclusions

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Dispute Resolution - Aims

• Skilled understanding of the problem combined
  with
• Resources to ensure rapid solutions with
• Authority to make politically difficult decisions
  allowing
• Confidence of all parties that
• A balanced solution will be found ensuring
• Equality, transparency and consistency

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Dispute Resolution The Stakes

• Failure to resolve disputes quickly can
• Delay the introduction of new services and
  infrastructure
• Block or reduce the flow of capital from
  investors
• Limit competition, increasing prices and reducing
  service quality
• Retard liberalisation and with it, general
  economic, social and technical development
• Too often, telecommunications disputes have
  caused unnecessary disruptions and delays in the
  development of telecommunications markets
• ITU Dispute Resolution in the Telecom Sector

In most EU Member States dispute resolution
procedures have taken longer than the four months
timeframe mandated in the EC Framework ECTA
2006 Regulatory scorecard
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EU Approach - 1

• Consumers - Simple and effective dispute
  resolution by a body independent of the parties
  (EU Framework Directive)
• Consumer protection goes hand in hand with the
  growth and diversification of electronic
  communications services and a growing number of
  service providers (European Commission, 12th
  Implementation Report)
• Communications Service Providers NRA must
  provide
• At the request of either party
• A binding decision to resolve the dispute
• In the shortest timeframe
• In any case within four months
• The State must ensure that all parties cooperate
• If mediation or other options offer a better
  chance of success, these should be used in this
  case NRAs can decline resolving dispute
• After four months, if no decision and no court
  action, either party can ask NRA to decide
  todecide within another four months
• Decisions must be in line with the objectives and
  letter of the law
• Decisions are made public
• Parties are free to take actions to court

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SECTION 1 Communications Service Provider
Disputes
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EU Approach - 2

• International Disputes
• Any party to the dispute can refer a complaint to
  an NRA concerned
• NRAs to work together to resolve disputes
• Judgments must respect the objectives and letter
  of the law
• If mediation or other options offer a better
  chance of success, these should be used in this
  case NRAs can decline resolving dispute
• After four months, and in the absence of court
  actions, NRAs should coordinate efforts to reach
  a resolution
• Parties are always free to take cases before the
  courts

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EU Best Practice Dispute Resolution (2006
Implementation Report)

• Perception of independence increases
  effectiveness
• Effective separation of regulatory and ownership
  functions improves real and perceived
  impartiality
• Clear determination of the NRA to encourage
  market parties to consult each other or informal
  mediation procedures before formal dispute
  resolution may reduce the number of disputes
• Informal mechanisms to report their positions to
  the NRA as well as internal mechanisms in
  associations can serve to provide additional
  dispute resolution mechanisms

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EU Problems Dispute Resolution (2006
Implementation Report)

• Some NRAs procedures are so cumbersome that it
  drives operators to other mechanisms
• Some NRAs lack resources and therefore avoid
  intervening in disputes
• Some NRAs do not have the powers to enforce their
  judgments
• Some NRAs experience of long appeals procedures
  and/or enforcement problems dissuade them from
  dispute resolution

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EU Problems Court Action (2006 Implementation
Report)

• Right of appeal is a fundamental principle of
  the framework
• Appeals take 4 to 6 years in Italy and Portugal
• The Greek courts have never issued a decision,
  with some cases outstanding since 2001
• Some decisions are systematically appealed in
  Belgium, Cyprus, Estonia, Hungary, the
  Netherlands, Slovakia and Sweden
• Action may be necessary to incentivise a more
  reasonable approach by market players

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Problematic incumbent approach

• Its good to talk and talk and talk
• And then take the NRA decision to court
• And then appeal the decision
• And then question the implementation of the
  decision
• And then appeal
• Complaints are often life or death for
  competitive operators
• Sometimes talk is not cheap

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Problematic competitive operator approach

• Automatically complain
• Take the most aggressive approach rather than
  testing less confrontational approaches first
• Demand more than the legal framework requires
• Leave it to the NRA to start dialogue with
  incumbent
• Leave it to the NRA to study the legal background

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UK Example CSP DR Principles

• Disputes (alleged failures to respect Competition
  Act) submitted to NRA must
• Have a clearly defined scope
• Provide evidence of failed commercial negotiation
• A statement by a company officer (ideally CEO)
  confirming best endeavours have been used to
  achieve agreement by commercial negotiation
• Complaints (alleged failures to respect ex ante
  obligations) submitted to the NRA must
• Identify specific ex ante obligation or
  competition abuse
• Provide factual evidence supporting the
  allegation
• Include a statement by a company officer (ideally
  CEO) confirming the completeness and accuracy of
  information provided negotiation
• The NRA strictly enforces these rules but does
  undertake to help smaller business comply, if
  they wish to make a complaint

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UK Example 2 DR Deadlines

• Deadlines
• Disputes (breaches of ex ante obligations) 4
  Months
• Competition Law
• 6 months if no grounds for action
• 12 months if infringement
• NRA avoids involvement unless one party is
  dominant or competition or consumers would suffer
• Where NRA avoids involvement, it does so in
  preference for alternative methods of dispute
  resolution

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UK Example 3 DR Methodology

• Scope is established at the outset (based on
  complaint) and NRA avoids deviation unless
  breaches of competition law are identified
• NRA insists on timely access to information and
  has formal powers to take enforcement action
  against companies failing to provide data
• Consultations will be undertaken with all parties
  for whom the outcome is of interest
• Investigation first establishes whether the
  Competition Act (preferred) or Communications or
  Broadcasting Acts should be used

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UK Example 3 DR Scope

• General conditions imposed on CSPs
• Universal service obligations
• SMP conditions imposed after market review
• Access conditions for access control services
• Access conditions for electronic programme guides
• Competition conditions in Broadcasting Act
  Licenses
• Conditions related to spectrum trading
• Misuse or improper use of public electronic
  communications networks

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SECTION 2 Consumer Disputes
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Consumer dispute resolution UK Example

• Two DR schemes
• Telecommunications Ombudsman
• Communications and Internet Services Adjudication
  Scheme
• ISPA works with CISAS to improve efficiency of
  system for consumers and Internet service
  providers
• Ombudsman scheme members are 96 of fixed line
  market, 55 of mobile market and 33 of ISP
  market
• Adjudication scheme has well over 200 member
  companies
• Huge increase in membership of these independent
  schemes in recent years

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UK Example 2

• NRA must ensure that Code of Practice is
  available. If a CSP is not a member of dispute
  resolution body, NRA will not approve the Code of
  Practice
• Failure to comply can result in a penalty of 10
  of turnover
• DR must
• Be independent
• Be easy to use, fair and transparent
• Be free of charge for consumers
• Have access to all necessary information to make
  judgments
• Investigate disputes effectively
• Must be able to make awards of appropriate
  compensation
• Must be able to ensure that compensation awards
  are properly implemented
• Consumers are not bound by DR decision and are
  free to take court action, if they wish. In
  2004/2005, consumers accepted 80 of decisions

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UK Example 3 - Problems

• CSP staff failed to identify complaints that
  should have been referred to ADR (0.5 of all
  complaints referred)
• Due to failure to refer, complaints went directly
  to NRA
• Consumers are not given information enabling them
  to use scheme correctly, so only a small
  proportion of complaints are actually treated by
  ADR body
• One of the two ADR bodies had too few staff,
  resulting in significant backlogs and deadlines
  being missed in 85 of cases
• On the basis of a small sample, NRA reports about
  half of complainants happy with ADR body
  response, compared with one third happy with CSP
  response

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UK Example 4 Suggested Solutions

• CSPs to improve procedures and information to
  consumers about ADR options
• CSPs to log all expressions of dissatisfaction as
  complaints to provide consistent statistics
• ADR providers to take action against CSPs that
  fail to respect rules or best practice alerting
  the NRA as appropriate
• ADR providers should monitor demographics of
  complaints to ensure that action can be taken to
  improve information for underrepresented groups
• ADR providers should use an independent third
  party to handle complaints about its own
  procedures
• NRA to develop best practice guidelines for CSPs

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UK Example 5 Basic Approach

• NRA has prepared guidelines for CSPs to design
  their code of practice
• http//www.ofcom.org.uk/telecoms/ioi/g_a_regime/gc
  e/ccodes/ccodes.pdf
• British and Irish Ombudsman Association has
  established guidelines for DR mechanisms
• http//www.bioa.org.uk/BIOA-New/criteria.htm

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EU Experience

• Various options used
• Belgium Ombudsman
• Czech Republic NRA
• UK Independent bodies
• Spain Ministry
• European Commission argues for cooperation
  between competent bodies and clear division of
  competences

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Lessons from global experience

• Domain name disputes
• Plaintiff picks the arbitration body
• Arbitration bodies need to be picked by
  plaintiffs to survive
• Likely consequences for
• Credibility?
• Consistency?
• Balance?
• WIPO Decision on vivendiuniversalsucks.com
• By the same reasoning, being satisfied that
  certain members of the public in general and
  "Internauts" in particular, not being English
  speakers and/or aware of the meaning of the word
  "sucks" in the Internet world, would be likely to
  understand "sucks" as a banal and obscure
  addition to the reasonably well-known mark
  VIVENDI UNIVERSAL and that, accordingly,
  ltvivendiuniversalsucks.comgt refers to goods or
  services provided by the Complainant, this Panel,
  by majority, finds the requirements of paragraph
  4(a)(i) of the Policy to have been met.
• WIPO Arbitration and Mediation Centre Case
  D2001-1121

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